Tuesday, December 5, 2017

Australia's Growth Misses Estimates -- Bloomberg -- December 5, 2017

Electricity in Australia on very hot days at peak energy use times can cost upwards of $14,00/MWh. And then journalists have trouble explaining why Australia's households are spending less.
Australia’s economy grew slower than forecast as household spending rose at the weakest pace since the 2008 financial crisis, reinforcing the likelihood of the central bank keeping interest rates on hold for longer.

Vern Whitten Photography Update -- December 5, 2017

After he sent me his "Wonders of North Dakota" package, I wrote Vern Whitten that by the end of the week the post with his aerial photos of North Dakota would be the #1 post on the blog by the end of the week.

Less than 24 hours after his photos were posted on the blog, his photos are ow the #2 post visited on the blog.

His photos are always the #1 post after they get posted. Sent Vern a note; he would love to hear from you. His contact numbers are at the link above.

COP To Increase CAPEX Significantly In 2018 -- December 5, 2017

We posted the link to this story earlier today, but did not provide any data points from the article. This is a big, big story. COP is a major player in the Bakken through its subsidiary, Burlington Resources (BR).

From the article over at RBN Energy:
As a volatile 2017 nears the finish line, the big question for U.S. exploration and production companies is whether they will throttle back their capital expenditures in 2018, cruise on at the same pace or step on the accelerator. We won’t have all the answers for a couple of months, but early guidance issued along with third-quarter 2017 earnings results indicates a solid 14% increase in investment by seven oil-weighted and diversified producers.
The big story among this handful of announcements is a 22% gain in planned 2018 capex by giant ConocoPhillips, which had been slashing investment since 2014. The company’s $2 billion capex boost includes doubling spending on its North American unconventional portfolio
Preliminary guidance for the natural gas producers, on the other hand, tells a different and less interesting story. Six companies, two-thirds of the nine gas-weighted E&Ps we’ve been tracking, indicate their 2018 investment will be relatively flat with the preceding year. So today, we focus on the 2018 plans of the oil producers and take an in-depth look at the ConocoPhillips budgeting process and the company’s noteworthy investment increase.
Let's see if the Bakken is mentioned. Not yet:
We will note here that $3.5 billion of [COP's] capital budget is to maintain current production, while $2 billion is targeting growing production and cash flow.
And more:
The first priority has two prongs: to sustain current production and to maintain its current dividend. By shedding high-cost Canadian oil sands and conventional North American gas assets, ConocoPhillips significantly reduced its cost of supply. The company says it now can generate $5 billion in free cash flow at a $40/bbl oil price for an investment of just $3.5 billion in maintenance capital. The company also believes it can deliver its second priority — at least modest annual dividend growth — even at a sustained $40/bbl oil price. Assuming oil prices stay above $40/bbl, ConocoPhillips also has fully funded its third priority (reducing debt from $21 billion to $15 billion by 2019) and its fourth priority (repurchasing $1.5 billion per year in company shares through 2020) through asset-sale proceeds and cash at hand.
Ah, here it is:
With the first four priorities met, ConocoPhillips can finally turn to what it calls disciplined growth to generate significant cash flow expansion and reserve replacement. The company is allocating $2 billion in annual growth investment in 2018-20, raising its total 2018 capital investment to $5.5 billion — 22% higher than 2017. The company plans to invest 60% of that growth capital ($1.2 billion annually) to more than double the rig count in its three major unconventional plays — the Permian’s Delaware Basin, the Eagle Ford Shale and the Bakken Shale — to deliver 22% compound annual production growth in 2018-20 and generate more than $2 billion in cumulative cash flow.

The Political Page, T+318 -- December 5, 2017: Answer To An Earlier Pop Quiz -- Dairy Cows


Later, 5:24 p.m. Central Time: another reader wrote:
Well, I knew those poor Holstein cows were going to get blamed.
This article says faulty meters in CA spew 6.6  Bcf of methane a year.
Most folks will get blocked out of the linked article, but if you can get to it, it provides more information on this nonsense. If you are blocked out and are interested in the article let me know.

Later, 4:57 p.m. Central Time: see first comment --Before dairy farm there were millions of buffalos roaming the country and mammoths, sabretooth tigers, wolves, deer, elk and other very large mammals. I guess they didn't make methane or maybe if they did might have cause the end of the last ice age:)so was that good or bad if they did! The globalist new religion is "green" and "mother-earth" is their god, oh wait "they-earth", whatever!

How many buffalo were there before the Industrial Age? Estimates of bison numbers vary from 30 to 75 million. 50,000,000 to 60,000,000 are the most common numbers cited as total buffalo population in the early 1800s. 

Original Post

Illegal border crossings. Based on arrests, number of illegal immigrants streaming across the "southern border" is at a 46-year low ... and as far as I can tell, most Americans are doing just fine without an illegal immigrant doing their yard work or working farms in California.

This story is from the BBC so you know it has to be true. Many, many data points at the linked article.

Methane emissions: speaking of California -- back to that question asked the other day. This is the answer to an earlier pop quiz in which we asked what is the number one source of California's methane emissions: dairy cattle.

From Bloomberg via Rigzone:
Methane is responsible for about a quarter of human-generated global warming. While it's not nearly as prevalent as carbon dioxide, and it breaks down in the atmosphere faster, methane is many times more effective than CO2 at trapping heat. And avoiding a man-made climate catastrophe will require limiting emissions from farms as well as oil and gas pipelines, landfills, and other sources.
In California, most methane emissions are from cows -- chiefly the state's 1.7 million dairy cows, whose manure is typically washed into methane-spewing lagoons. This is why the state, which has pledged to reduce methane emissions by 40 percent by 2030, is looking to the big Central Valley dairy farms for substantial reductions.
Wow, the hyperbole never quits ... to avoid a man-made climate catastrophe. Well, at least folks reminding us about cattle farts keeps our collective minds off nuclear waste. And North Korea. And volcanoes. 

Why doesn't California simply mandate that California dairy producers barn their cows in Nevada? It works for coal. Or ship the manure to Nevada by rail -- maybe a spur off the "bullet train" route.

CLR With Four New Permits -- December 5, 2017

Active rigs:

Active Rigs533964188191

Four new permits:
  • Operator: CLR
  • Field: Oakdale
  • Comments: it's been a long time since we've seen permits in the Oakdale oil field;
Nine permits renewed:
  • Crescent Point Energy (8): four CPEUSC Ruby permits in Williams County;and four CPEUSC Holmes permits in Williams Count
  • Whiting: a Moccasin Creek permit in Dunn County
Five producing wells (DUCs) reported as completed:
  • 33164, 1,718, Statoil, Russell 10-3F XW, Painted Woods, 4 sections, t11/17; cum --
  • 33320, 2,903, WPX, Mandaree South 25-36HC, Spotted Horn, t10/17; cum 16K 10/17;
  • 33321, 2,615, WPX, Mandaree South 25-36HT, Spotted Horn, t11/17; cum 7K 10/17;
  • 33323, 2,724, WPX, Mandaree South 25-36HZ, Spotted Horn, t11/17; cum --
  • 33322, 2,703, WPX, Mandaree South 25-36HD, Spotted Horn, t11/17; cum --

Matador Production Improves; Well Design Becomes The Narrative -- Filloon -- December 5, 2017

Matador production results improve as well design becomes the narrative -- over at SeekingAlpha -- Filloon:
  • Matador continues to improve well design, and production per foot
  • wells completed after January of 2016 saw oil production improvements of from 109 KBO to 164 KBO over 16 months of well life, when compared to the year prior
  • the majority of Matadore locations in the Delaware are one mile laterals so production per well should improve as horizontals are lengthened
  • many operators in the Delaware are still completing shorter laterals than other plays. This is why the production per foot metric is important. Matador not only has upside as it lengthens laterals, it continues to work through better stimulation techniques. We continue to like Matador as improvements in the west Permian continue.

Again, another article with few specifics. 

December, 2017, Atmospheric CO2

It looks like "CO2 Now" has quit updating monthly atmospheric CO2 data. This is the Scripps data:

Atmospheric CO2 varies seasonally. The December, 2016, atmospheric CO2 was 404.48.

Blackout Bingo In Spanish -- A Note For The Granddaughters -- December 5, 2017

Lodgepole Reefs, An Update -- December 5, 2017: Happy 21st Birthday -- Dinsdale 2-4

Disclaimer: in a long note like this, there will be typographical and factual errors. If this information is important to you, go to the source.

With regard to this subject (Lodgeple reefs) I welcome any comments from those in the oil industry who can add more information or correct me where I am wrong. 

Earlier this morning (or overnight) a reader asked what percent of Lodgepole wells are successful in the area southwest of Dickinson, ND?

This had to do with this well:
33997, dry, Freedom Energy Operating, LLC, Freedom Energy ND 1-15, Heart River, pool: Lodgepole; spud 10/2/17; from the permit, estimated TD = 9,950 TVD;
From the geologist's report: this well was targeting a Lodgepole reef:
Oasis Petroleum Freedom ND #1-15 [SE SE Sec. 15, T139N-R97W] is located ~6 miles West of Dickinson, North Dakota. Freedom ND #1-15 is situated within the Heart River Field in Stark County. A vertical hole targeting the porous Reef of the Lodgepole formation.  
It was a steep learning curve for me when I first learned about Lodgepole reefs. I discuss Lodgepole reefs at this post and that's where I will continue to track them. 

I don't know what the percentage is, but anecdotally (based on casual observations or indications rather than rigorous or scientific analysis), these are my thoughts:
  • there is a difference between the Lodgepole formation and Lodgepole reefs
  • to date, it appears that operators in North Dakota have only been successful hitting the Lodgepole reefs immediately west, southwest, and south of Dickinson, ND and inside city limits
  • the farther one gets from Dickinson, ND, the less likely one will hit a reef
  • some operators have targeted the Lodgepole formation north of Williston (I forget now how those have turned out) 
  • once you leave the area west and southwest of Dickinson the likelihood of hitting a Lodgepole reef is pretty unlikely
  • even in the area of the Lodgepole reefs it appears to be a real "hit or miss" (no pun intended) outcome
  • Lodgepole reef wells are vertical (or directional/vertical) wells and are not fracked; very, very low expense to drill
  • I am not quite sure what to think about horizontal wells (if there are any) that target the Lodgepole in the Dickinson area
  • Looking at the "Lodgepole wells" west and southwest of Dickinson: I have only looked at a few of these wells; I assume they are all Lodgepole reef wells but my assumption could be wrong
One can see a number of Lodgepole wells at my "Monster Wells" link.

As a "case study," I looked at one Lodgepole well in the Dickinson area, #14213. I have blogged about this well on numerous occasions. From this post: "Denbury Onshore, LCC, may have the most productive well in North Dakota," posted March 27, 2011. This Lodgepole reef well is inside Dickinson city limits.
Interestingly, the "most productive well in North Dakota" was just shut in two months ago. In its 21 years of operation, it has never been shut in for a full month, until now.

The scout ticket:

The graphics:

From the NDIC file:

100% Of Bakken Wells Coming Off Confidential List Go To DUC Status -- December 5, 2017

Yesterday, 10 of 11 wells coming off the confidential list were DUCs. Today, three of three Bakken wells coming off the confidential list are DUCs.

Tuesday, December 5, 2017
  • 33416, SI/NC, MRO, Miles USA 41-2TFH, 2B, Antelope, no production data,
  • 33340, dry, Armstrong Operating, Frenzel 1-35, Wildcat, Lodgepole; vertical, Stark County, NENE 35-139-96, nothing in the file report yet about the actual drilling; company offered to re-seed the area but the farmer declined; said he was going to break up the entire field and re-seed the entire field; see graphics below;
  • 32902, SI/NC, BR Lovaas 4-8-12 MBH, Blue Buttes, no production data,
  • 31434, SI/NC, Slawson, Osprey Federal 2 SLH, Big Bend, no production data, 
Field of Dreams
Graphics Related To The Frenzel

December, 2017, NDIC Hearing Dockets

Link here.

Dockets are tracked here

The usual disclaimer applies.

Cases Of Interest

Wednesday, December 13, 2017
26250, Oasis, Charlson and/or Phelps Bay-Bakken, establish an overlapping 960-acre unit; part of section 12; all of 13-153-95, 11 wells on the unit; McKenzie County
26275, MRO, Reunion Bay-Bakken, 8 wells on a 1280-acre unit; 27/34-151-93; Mountrail County
26277, MRO, Killdeer-Bakken, 8 wells on a 1280-acre unit; 25/36-146-95; Dunn County

Thursday, December 14, 2017:
26284, Resource Energy, i) create an 800-acre unit; ii) create two 1280-acre units; a horizontal well in the Madison pool in each drilling unit; Divide County

Wednesday, December 20, 2017: two cases, both involving True Oil, LLC, for enlargement and unitization of the Red Wing Creek-Madison Unit, McKenzie County

Full Summary (pending)

Wednesday, December 13, 2017

26246, Foundation Energy, Beach-Red River Unit, unitization, Golden Valley County
26247, Whiting, vapor pressure of crude oil production in Mountrail and McKenzie counties
26248, Whiting, Epping and/or East Fork-Bakken, establish three overlapping 2560-acre units; two wells in each; Williams County
26249, Hess, Blue Buttes-Bakken, establish an overlapping 1280-acre unit; 2 wells; McKenzie County
26250, Oasis, Charlson and/or Phelps Bay-Bakken, establish an overlapping 960-acre unit; part of section 12; all of 13-153-95, 11 wells on the unit; McKenzie County
26251, MRO, Chimney Butte-Bakken, amend; establish a 2560-acre unit; 2 wells; Dunn County
26252, MRO, Chimney Butte-Bakken, establish a 2560-acre unit; 1 well; Dunn County
26253, MRO, Killdeer and/or Chimney Butte-Bakken, establish a 2560-acre unit; 2 wells; Dunn County
26254, MRO, Killdeer-Bakken, establish a 2560-acre unit; 1 well; Dunn County
26255, MRO, Killdeer-Bakken, establish a 2560-acre unit; 1 well; Dunn County
26256, MRO, Killdeer-Bakken, reduce setback rule; Dunn County
26257, MRO, Bailey-Bakken, reduce setback rule; Dunn County
26258, MRO, Bailey-Bakken, flaring, Dunn County
26259, MRO, Antelope-Bakken, flaring, Dunn County
26260, MRO, Four Bears-Bakken, flaring, Mountrail, McKenzie counties
26261, MRO, Reunion Bay-Bakken, temporary period of time and exclude the volumes from its calculations of statewide, county-side, and field-wide flare volumes as an exception tothe provisions of Commission Order NO 24665, Dunn, Mountrail, McKenzie counties
26262, NDIC; termination of the Davis Buttes-Tyler Unit, Stark County
26263, Petro Harvester Operating, revoking a Windrige Operating permit for Goldeney 10-15 1H, #34285; Burke County
26264, NDIC, confiscation, SWD well; McKenzie County
26265, NDIC, confiscation, production equipment, Alturas Energy, McKenzie County
26266, NDIC, confiscation, production equipment, Alturas Energy, McKenzie County
26267, NDIC, confiscation, production equipment, Alturas Energy, McKenzie County
26268, NDIC, confiscation, production equipment, Alturas Energy, McKenzie County
26269, NDIC, confiscation, production equipment, Alturas Energy, McKenzie County
26270, NDIC, confiscation, production equipmetn, Alturas Energy, McKenzie County
26271, Beach field, Foundation Energy, fluid injection into the Red River Formation in the Davidson 44-31H well (#25676), Golden Valley County
26272, Hess, commingling
26273, Hess, commingling
26274, BR, commingling
26275, MRO, Reunion Bay-Bakken, 8 wells in a 1280-acre unit; Mountrail County
26276, MRO, Chimney Butte-Bakken, 2 wells on a 2560-acre unit; Dunn County
26277, MRO, Killdeer-Bakken, 8 wells on a 1280-acre unit, Dunn County
26278, MRO, Killdeer-Bakken, 2 wells on a 2560-acre unit; Dunn County
26279, MRO, Jim Creek-Bakken, 4 wells on a 1280-acre unit, Dunn County
26280, True Oil, flaring, McKenzie County
26281, True Oil, flaring, McKenzie County
26282, True Oil, flaring, McKenzie County
26283, Oasis, SWD well; McKenzie County

Thursday, December 14, 2017

26284, Resource Energy, i) create an 800-acre unit; ii) create two 1280-acre units; a horizontal well in the Madison pool in each drilling unit; Divide County
26285, CLR, East Fork-Bakken; establish an overlapping 2560-acre unit; 2 wells; Williams County
26286, CLR, Willow Creek, Crazy Man Creek, and/or Camp-Bakken; establish two overlapping 2560-acre units; 2 wells; McKenzie, Williams
26287, Slawson, create a 160-acre unit; to recomplete the Condor 1-36-25H well (#19742) [from the well file, it looks like this well has been recompleted; the well has been put on a pump, sometime in January, 2017;
26288, RimRock Oil & Gas Williston LLC, Twin Buttes-Bakken, flaring, Dunn County
26289, PetroShale, Squaw Creek-Bakken, revoke a Missouri River Resources permit, FBIR Packineau (#34188), McKenzie County
26290, Zavanna, pooling,
26291, Slawson, pooling
26292, CLR, pooling
26293, CLR, pooling
26294, CLR, East Fork-Bakken, 2 wells in an existing overlapping 2560-acre unit; Williams County
26295, CLR, pooling
26296, CLR, pooling
26297, CLR, Willow Creek-Bakken, 9 wells on an existing 1280-acre unit; McKenzie, Williams County
26298, CLR, commingling
26299, XTO, pooling
26300, XTO, pooling
26301, XTO, pooling
26302, XTO, pooling
26303, XTO, pooling
26304, XTO, pooling
26305, XTO, pooling
26306, XTO, pooling
26307, XTO, pooling
26308, XTO, Lost Bridge-Bakken, 10 wells on an existing 1280-acre unit; Dunn County
26309, XTO, pooling
26310, XTO, pooling
26311, XTO, pooling
26312, XTO, pooling
26313, XTO, pooling
26314, XTO, pooling
26315, XTO, pooling
26316, XTO, pooling
26317, Peregrine Petroleum, risk penalty legalese
26318, White Butte Oil, flaring
26319, White Butte, flaring
26320, White Butte, flaring
26321, Crescent Point Energy, SWD, Marmon Field, Williams County
26322, White Owl Energy, SWD, Blue Buttes Field, McKenzie County
26323, NP Resources, SWD, McKenzie County
26324, Hydra Services, SWD, Williams County

December NDIC Hearing Dockets Have Been Posted -- December 5, 2017

Quick: what is the number one source of California's methane emissions? Answer and link to be posted later. Answer at this post.

Goldman Sachs forecast for oil: backwardation, WTI prices:
  • previously for 2018: $55
  • current forecast for 2018: $57.50 (could rise somewhat if OPEC successful at drawing down more than expected
  • 2019: $55 (as shale producers respond to better prices)
  • 2020: $50
The Bloomberg Gadfly tens to support the Goldman position. From the Gadfly:
  • a record: Money managers' net length in three big crude-oil contracts -- West Texas Intermediate traded on Nymex and the Intercontinental Exchange and the latter's Brent contract -- stood at 989.9 million barrels as of Friday, a record
  • OPEC's cuts interplay
    • short-cycle production from US shale
    • longer-cycle output from Canada and Brazil
    • global demand
  • result? the 2018 market -- despair on one end; elation on the other
  • the range: $20 - $25/bbl or roughly $45 to $65 in terms of WTI
  • further gains require catalysts
  • OPEC counting heavily on stronger demand or lackluster US production growth
December dockets have been posted. I will get to them later today. The NDIC link is here. Highlights have been posted.

Market: futures look nice.

Back to the Bakken

Active rigs:

Active Rigs533964188191

RBN Energy: strong CAPEX boost by ConocoPhillips headlines early 2018 guidance.